Legal Question in Real Estate Law in New York

Re: House sale

Here's how it works -

When someone sells an asset for more than they paid for it, they will be taxed on the gain. If the asset is held for more than one year, the gain is considered long term, and is taxed at a lower rate. If the sale price is less than the purchase price, the loss can be deducted against other gains. If there are insufficent gains to offset the loss, a small portion is allowed each year.

The amount of money borrowed to purchase an asset is not a factor. In fact, borrowing money to buy assets for a profit is what the big wigs do; it is called "leveraging." By borrowing other people's money, it is possible to realize a greater gain than if you paid 100% cash for an asset.

Since this seems to be your home, you probably could shelter up to $250,000 in profit.

I strongly suggest you consult with an accountant, as a little tax planning in advance can save you bundles down the road.

J. Douglas Barics